For many years the inconvenient population aged 50+ in the US could count on 3% interest on savings accounts, the difference between eating and not eating for many. Obama and his GOP pals know if they keep interest rates at zero this group will have no choice but to select euthanasia or suicide.
2/6/12, ""No Country For Old Men?" Bernanke Plan To Exterminate Savers Is Unsustainable," Zero Hedge, Tyler Durden
"Bernanke's recognition of his penalizing savers with low rates as an 'issue for people' sparked an interesting note from the WSJ on how sensible and stoic savers are being herded (unsafely) into risky investments....By removing the last shred of hope for a rise in savings rates anytime soon, the Fed is once again creating the potential for major unintended consequences as the 30% drop in interest income for US savers from the 2008 peak forces them to extend duration (TSYs), lower quality (corporate bonds), and/or increase leverage/risk (equities). One only has to look at Treasury yields, Muni yields, investment-grade bond yields, and now high-yield bond yields for how tempted investors (retail and professional 'insurance/pension' assets) have become to take their safest net worth asset (low risk liquidity) and expose it to the business/credit cycle and all its myriad event risks. While reducing the rate of savings might seem sensible for the short-term from the Fed perspective, it leaves a wholly unsustainable recovery (or bubble in who knows which asset class next) and as Nordea notes this week, based on their models, a considerably higher savings rate will be needed going forward (for any sustainability) even as 'saved money' is rotated into risk
- or spent on quality-of-life maintenance."...via Instapundit
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